Time to Renew Your Office 365 Deal – Where Should You Place Your Bet?

Sourcing managers with a Microsoft enterprise agreement (EA) that is about to expire face an important decision and may have many questions. Should they renew their next EA along the same lines as they did three years ago? Expand it to embrace Microsoft’s new cloud-based services, including the Office 365 suite? Scale it back significantly to save money?

Fundamental changes in Microsoft’s product and licensing strategies mean drastic changes to its software assurance’s (SA) value. Your decision criteria will be very different from when you last evaluated your EA, and any related decision involves placing bets on your organization’s future deployment of Microsoft products.

Where should you place your bet?

Renewing the Office SA if moving towards Office 365 ProPlus: You can secure a lifetime loyalty discount of 20% or more on Office 365 ProPlus if you own a perpetual license for Office with SA. The EA program enables enterprises to migrate users to Office 365 over time. The subscription product includes several benefits over the perpetual license version, such as per-user licensing and Office for iPad. Moreover, Office 365 ProPlus and its associated cloud storage are Microsoft’s take on the areas of office collaboration and productivity.

Taking an SA vacation if the move to Office 365 ProPlus is three or more years away: Your existing EA has bought you the rights to Office 2016. You could drop SA now, upgrade to Office 2016 in a year or two, and stay on that version for several years. Some technology managers won’t accept Office 365 ProPlus because they don’t want it communicating with Microsoft without their control. Others merely have higher priorities. The longer the interval before your next upgrade beyond Office 2016, the more likely the short-term savings will outweigh the long-term loyalty discount. You can still buy a few Office 365 ProPlus subscriptions under your MPSA contract for those users who really need the extras, such as Office for iPad, or if you want to formally evaluate it.

Few sourcing managers are 100% confident about which way to bet. Gather as much information as possible to improve your chances of making the right call while finding answers to the following questions:

How does Office 365 ProPlus fit into your firm’s digital and collaboration strategy? Speak with the colleagues setting the strategy for client devices and collaboration tools to find out their opinion of the Office 365 family of products. Do they plan to adopt new services such as Delve, Yammer, and Skype for Business? Renewing SA will make more sense if they plan to use these as a catalyst for transforming the way colleagues collaborate with each other. The SA vacation could be the better choice if they are happy with the current state of things.

Does your organization need short-term savings more than long-term ones? Ask your financial colleagues how they will evaluate the cashflow implications of an SA vacation. Businesses suffering temporary downturns may prefer to retain their cash rather than pay now for a future right that they aren’t sure they need. However, ensure that the accountants understand that this is merely a vacation, not a permanent savings. Otherwise, there is a significant risk that you may struggle to retrieve the budget that you’re now relinquishing when you eventually want to restore Office to your EA.

What incentives will Microsoft offer you to remain in the EA program? Ask your Microsoft sales team (and/or your licensing solution provider) to help you evaluate the business case if you are considering dropping SA on Office. They can help you understand the SA benefits you will lose and quantify the full impact on your EA renewal price. For example, keeping Office in the EA will entitle you to cascading discounts on other Microsoft products, ranging from the Desktop Platform discount to Enterprise Cloud Suite (ECS). They may even be willing to sweeten the deal even further to tip a close decision in favor of full renewal — the SA vacation is a better negotiating lever than Google Apps, which is unlikely to be a credible threat for an enterprise customer.

That said, whether procurement managers think about taking a SA vacation or upgrading immediately, it is imperative to consider Google Apps as a close contender as well as a leverage over Office 365.

Google Apps for Business (GAFB) and Office 365:

If you work in an organization that absolutely must work with MS Office files regularly, particularly if you need to use the advanced functionality that MS Office applications provide, then the natural choice is going to be Office. Although GAFB can be used to produce and edit MS Office documents, this functionality is limited and you can expect hiccups when you try to edit and save a complex Office document or spreadsheet with a Google app. That said, although GAFB technically allows you to edit both documents produced with Google Apps and MS Office apps, this is not true of Office 365.

If your organization sends and receives a large amount of email, you might find yourself drawn towards a ‘Business’ GAFB plan, as these come with unlimited email storage. However, if you're on a budget and email storage is a big issue, you'll find that the Office 365 entry-level plans are considerably more generous.

The environment in which you are hoping to deploy GAFB and Office 365 should also be factored into your decision. If your organization uses a wide mix of devices and operating systems, then you could potentially make life easier for your users with GAFB, which is designed to run online. With GAFB, it simply won’t matter whether your team members use Mac OS, Windows, Linux, or Chrome OS – everything will look, feel and function the same. But if your organization is entirely MS Windows-based, there's a lot to be said for Microsoft Office 365; a plan involving the desktop apps will fit neatly into such an environment.

While it’s always a good idea to have some IT resources available, the resource and IT cost implications for deploying, maintaining, and supporting GAFB will (in my view) be lower than Office 365, particularly if desktop apps are involved. And finally, regarding scalability – the more affordable Office 365 plans (for example, the ‘Business’ ones) currently cap the numbers of users at 300. No such limit applies to GAFB plans.

One should focus attention on six key areas before making the final decision:

About the author

Ramakrishnan Iyer has an in-depth business consulting and advisory experience, specializing in Finance and Information Technology domains with expertise in financial modeling, supplier relationship management and strategic sourcing. He has also pioneered the creation of dynamic M&A intelligence frameworks focusing on deal valuation and due diligence and has worked extensively in the IT & telecom domain while focusing in the Data Analytics space.